The Chinese market presents substantial opportunities for foreign enterprises, making it an enticing prospect for international business. A key element for companies who invest in this marketplace, however, is vigilance in the field of patent infringement litigation. The Chinese courts have seen a significant surge in this area, particularly cases brought forward by foreign entities.
As highlighted by China’s Intellectual Property Tribunal of the Supreme People’s Court, over 10% of total caseload in the years 2020, 2021, and 2022 were foreign-related cases. Notably, almost 60% of these pertained to patent infringement disputes, emphasizing the necessity for foreign businesses to familiarize themselves and move carefully within the realm of patent litigation in China.
The concept of injunctive reliefs in the Chinese legal system stands as one feature that can prove advantageous to right holders. In cases of proven infringement, the cessation of infringement is frequently granted by the courts. Although the balance between patent holders and potential infringers has sparked discussions, the Supreme People’s Court maintains that noble considerations such as “national interests and public interests” justify enjoying an injunction.
This stance was underscored in the Golden Elephant case, where the plaintiffs requested the dismantling of infringing production equipment and destruction of related technical assets. The Supreme People’s Court overruled the lower court’s verdict and ruled in favor of the plaintiffs, emphasizing respect for intellectual property rights.
A notable recent change in the legal landscape is the apparent shift in patent infringement damages. Previously criticized for modest amounts, the 2020 amendment to Chinese patent law has introduced “punitive damages”, which can reach up to five times the calculated damages. In 2022, Beijing courts reported average damage awards of 2.86 million yuan in technical-related cases.
The strategic advantages of litigating in China also need to be considered. One is the sheer size of the Chinese market, which often makes it a key focus within many industries. The other pertains to the potential synergies that litigation in China can bring to the resolution of patent disputes in other jurisdictions, such as the US and Europe.
With the evolving patent litigation landscape in China, global businesses’ engagement with China’ patent litigation system is more of a necessity rather than an option. Companies must adapt to ensure sustainable success in the region.
The original article was authored by Ruixue Ran, Justin Wang, and Xiaoliang Chen from Covington & Burlington, and can be accessed here.